Fitch expects Ghana’s Official Creditor Committee to set debt parameters by end of 2023
Rating agency Fitch has underscored that the Official Creditor Committee (OCC), comprising the Paris Club and the Government of Ghana, is projected to reach a consensus on debt treatment parameters by the close of 2023.
However, Fitch anticipates that an accord with private creditors on comparable terms will be achieved by mid-2024. These agreements are seen as pivotal in facilitating Ghana’s exit from its current default status.
In its comprehensive analysis of Frontier Markets, Fitch emphasized that successful negotiations with both external creditors will pave the way for Ghana to transition out of default.
This development follows Zambia’s recent agreement with its external creditors, which has set a positive precedent for the resolution of sovereign restructurings in Frontier Markets.
The International Monetary Fund (IMF) has estimated that external debt restructuring will need to provide financing amounting to $10.5 billion between 2023 and 2026.
Notably, Ghana secured approval from the IMF Executive Board for a $3 billion Economic Credit Facility arrangement on May 17, 2022, following the establishment of the Official Creditor Committee for external debt treatment.
To restore debt sustainability, the IMF has called for a reduction of approximately 30% in Ghana’s public sector external debt. This development underscores the critical efforts aimed at addressing Ghana’s financial challenges.
